7th tracking report. final_july 16 final new

Bad Economics is Bad Politics

PML-N Economic Agenda

7th Tracking Report: January-June 2016

Policy Research Institute of Market Economy (PRIME)

With support from: Center for International Private Enterprise

PRIME is a public policy think tank working for an open, free and prosperous Pakistan by creating

and expanding a constituency for protective function of the state and freedom of the market.

This report is the result of a project, “PML-N Economic Agenda: Tracking Report” which aims at

initiating and informing policy dialogue and public debate on the implementation of the economic

agenda of PML-N central government that sworn into the power at federal level in Pakistan in May

2013. The project is being supported by Center for International Private Enterprise (CIPE).

Published by: Policy Research Institute of Market Economy (PRIME)

© PRIME Institute

Recommended Citation: PRIME Institute (2016), Bad Economics is Bad Politics: PML-N Economic

Agenda, 7th Tracking Report (January-June, 2016), Islamabad.

No. of copies: 400

Published in: July 2016

ISBN: 969-9824-14-2

For inquiries:


Office 401, Gulistan Khan House

82-East Fazal-e Haq Road, Blue Area

Islamabad 44000- Pakistan

Tel: 00 92 (51) 8 31 43 37 - 38 Fax: 00 92 (51) 8 31 43 39

www.primeinstitute.org

Email: [email protected]




Authors:

Dr. Khalil Ahmad & Ali Salman

Research Support: Talha Hassan

Available at:

www.govpolicyscorecard.com.pk

PML-N Economic Agenda: 6th

Tracking Report

Executive Summary

This is PRIME’s 7th Tracking Report on PML-N’s federal government economic performance

which judges the implementation of their economic manifesto. It serves the basic purpose of

a functioning democracy: accountability. The report serves as a reminder to both the

government in power and media and public at large on the status of implementation of

electoral promises.

There are two pillars or “Areas” of PML-N economic manifesto: Economic Revival and

Energy Security. The report tracks down 89 targets set out by PML-N to achieve economic

revival and energy security. Out of a maximum score of 10, the report awards a plausible

score on the basis of three parameters: legislative development (2.5), institutional framework

(2.5) and implementation (5) on all targets.

While a quantifiable score is given in almost all targets, some targets are deemed as “As yet

no development” and remain “not scored” because of no progress. The report authors

provide a detailed methodology on the scoring technique and methodology which is

adopted to ensure transparency, consistency and validity.

The 7th tracking report- covering the time period of January-June 2016- is titled “Bad

Economics is Bad Politics”. It argues that the PML-N central government has chosen to

unfollow promised reforms i.e. privatization, deregulation and liberalization, and adopt

popular economic measures underpinned by what it calls as “Development Politics” and

other populist economic measures.

The report provides examples of a stalled privatization program in the energy sector,

wherein privatization of GENCOs and DISCOs has already been shelved, though the

government insists that the process has only been delayed.

The tracking report notes that in the energy sector certain reforms have been introduced

during the last three years, though the process has been slow. The report includes these as

examples: Mandatory wheeling of electricity by DISCOs and NTDC; Net-metering (sale-

guarantee) for the small producers/consumers; Developing alternative renewable energy

sources; and developing and creating a wholesale market for electricity.

Individually considered, in the Area of Economic Revival, the PML-N central government

earned an overall average of 4.17 out 10; whereas in the Area of Energy Security the overall

average score is 4.51.

PML-N has completed its three years. During this time, the score has kept on improving. In

the area of Economic Revival, it got a lift from 3.17 to 4.64; that accrues a gain of 46 %;

whereas in the area of Energy Security, it increased from 4.16 to 5.27; that constitutes a gain

of 26 %.

Previous tracking reports have argued that without ensuring the Energy Security, the

Economic Revival will remain a far-fetched dream. While reiterating its hypothesis, the 7th


Tracking Report

report clarifies that ensuring Energy Security is a necessary condition for the Economic

Revival, but not a sufficient condition.

Commenting on the development politics of PML-N, the report lays out two conditions for

testing economic viability of an infrastructure project: first, whether in the long term it is

beneficial or not; and second, whether it is beneficial for the majority or not. The report

concludes that, most probably, “there are only very few infrastructural projects of the PML-

N that will fulfil both of these conditions.”

The report ends at an optimistic note by hoping that: “the PML-N has got the guts to take

heart to have a resolve to make use of whatever time it has left with at its disposal, and go

for the way of “Good Economics is Good Politics.”


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Introduction

Bad Economics is Bad Politics is 7th report under PML-N Economic Agenda: Tracking Project

which reviews Pakistan’s economic performance by tracking the progress made on the

implementation of economic manifesto announced by the party in power in Islamabad,

Pakistan Muslim League-Nawaz (PML-N). The purpose is to initiate and inform policy

dialogue and public debate on the progress made on the economic agenda of PML-N. This

tracking directly serves the basic principle of a functioning democracy: accountability.

Current report covers progress made during January-June 2016.

Structure

The report picks two distinct sections of the PML-N manifesto: Economic Revival and

Energy Security, which it terms as “economic agenda”. These three “Areas” are then divided

into “Components” and “Sub-components”. In most cases, these are based on a simple

reproduction of text of the manifesto, and in some cases, some editing has been carried out

for the purpose of clarification and structure, but without altering the meaning of the

authors of the manifesto. Under the area of Economic Revival, 10 components and 57 sub-

components (or targets) have been identified. Energy Security includes 15 components (out

of which 10 are targets) and 22 sub-components, making a total of 32 targets.

From this report onwards, this Tracking Report has stopped including Social Protection, as

measures taken under this do not directly reflect economic priorities of the government, and

a much smaller number of underlying targets (only 2) gave undue weightage to a better

performance in this area, possibly over-shadowing the performance in the vital areas of

Economic Revival and Energy Security.

In all, the report identifies 89 measurable “indicators” and allocates scores on all of them,

subject to information availability, on the basis of three distinct parameters: policy and

legislative developments, institutional development & reforms, and implementation. Policy

and Legislative Development indicate the presence, or absence, of a supportive legal

environment; Institutional Reforms indicate the quality of governance structure and

Implementation shows the actual progress made on the policy.

Scoring

The scorecard quantifies the status of implementation on announced goals in the PML-N

economic agenda. For each of the target area, the score is assigned from 0 to 10 with 10 being

the highest. The score is sub-divided in three categories namely Legislative and Policy

Developments (2.5), Institutional Development and Reforms (2.5), and Implementation (5).

The team has developed and consistently applies a set of rules to minimize discretion.

1. Averages are computed on non-weighted basis. All three “areas” i.e. “Economic

Revival”, “Energy Security” and “Social Protection” and their constituting

components and sub-components carry same weight towards the overall score.

2. Negative scoring is not allowed as it has a disproportionate impact on the overall

score of each category in computation of averages.

3. Previous score is maintained, if positive policy direction has been announced in the

last report though no further progress is made. Statistically, it neutralizes the

cumulative score.


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4. Score of “As yet no development”, is awarded if work in the particular area or

component is yet to begin. Such components and sub-components are not scored and

are discarded while computing average.

5. If a goal is achieved, then in the subsequent editions, it is mentioned as “Target

Stands Achieved” and is not counted towards taking averages.

6. Previous report is used as benchmark time period. Subject to information

availability, the data included in the report pertains to the time period for which the

scorecard is being published.

7. The law of diminishing returns applies on scoring in the case of “Implementation”.

The increments in the scores tend to be smaller with time.

8. Score of 2 to 2.5 is assigned in “Policy and Legislative Development”, if one already

exists or has been developed. A lower score is assigned if a policy exists only in a

draft.

9. Score of 1 to 1.5 is assigned in “Institutional Development and Reforms” if some

progress is being shown or if some arrangements are already in place.

10. Score of 1 to 2 is assigned in “Implementation” if some progress has started. A goal is

considered to be achieved if the related policy is implemented.

11. Score of zero is assigned if progress has been reversed.

The structure and methodology of the report has been shared with a select group from the

business community, politicians and economists for the purpose of feedback and has

undergone several revisions.

The scoring gives a snapshot view on the performance of the government in a particular

area as well as an aggregate perspective. These snapshots are more meaningful over time as

performance would vary. Thus a new score is issued every six months and the baseline is

normally the previous report. Based on six months progress, a narrative report is prepared.

Interpretation of Scoring

For interpretation of score, following guidelines have been developed.

Zero: Progress has been reversed.

Nil: No progress made.

1 to 4.9: Policy direction is not clear, institutional bottlenecks exist and no or very little

implementation has started.

5 to 7.9: Policy direction is supportive, institutional reforms are in progress and some

implementation has started.

8 to 10: Policy direction is supportive, governance structure is functional and

implementation is complete.

By ‘complete implementation’, one should not necessarily interpret it as having achieved the

ultimate goals of the policy, e.g., welfare or industrial productivity, which does not lend to

easy assessment.

While working on the scorecard, the tracking team remains too cautious to commit to any

judgmental black & white, i.e. any statistical plusses or minuses, in-betweens, that may

translate into unjustified positivities or negativities.


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Another factor that needs to be highlighted is that the Scorecard and the Tracking Report

represents the performance shown or not shown during the last six months, in this case,

from 1st January 2016 to 30th June 2016. That means even though the PML-N has completed

three years’ time-period, i.e. 60 % of its tenure, the final verdict should rest in store and be

delayed till the bell tolls.

Data Sources

In order to develop a comprehensive scorecard, the team collects the data from publically

available documents and secondary data sources including Quarterly Reports of the State

Bank of Pakistan, Federal Budget, Pakistan Bureau of Statistics, Trade Policy, Proceedings of

Parliament and newspapers. The team tracks five newspapers on daily basis and develops

portfolio of news on the basis of classification system of the scorecard. These newspapers

reports become the basis of an interim assessment of the “current status”, which is then

verified, endorsed or rectified in the light of secondary data available.

The Team

The report and scorecard has been compiled by a team comprising political scientists and

economists. The tool development was primarily undertaken by Mr. Ali Salman and the

narrative report is developed by Dr. Khalil Ahmad. From PRIME research team, Mr. Talha

Hassan also contributed in compiling this report, verification of data as well as review of

scores computation.

• Mr. Ali Salman: Ali is the Executive Director Policy Research Institute of Market

Economy (PRIME). Ali has worked as a consultant economist for major

international development organizations, public sector organizations and non-

profits in Pakistan and other countries. He is author of several studies and

monographs and regularly writes for Express Tribune. Ali is a visiting fellow at

the Institute of Economic Affairs, London; an alumnus of International Academy

of Leadership, Germany and Atlas Leadership Academy, USA. He holds master

degrees in Economics, Public Policy and Business Administration.

• Dr. Khalil Ahmad: Ahmad is a political philosopher by training, and is the

founder of the first free market think tank of Pakistan, Alternate Solutions

Institute. He is a writer, and his latest books include the path-breaking ‘Pakistan

Mein Riyasati Ashrafiya Ka Urooj’ (The Rise of State Aristocracy in Pakistan) and

later, Siyasi Partian Ya Siyasi Bandobast: Pakistani Siyasat Ke Pech-o-Kham Ka

Falsafiyana Muhakma (Political Parties or Political Arrangements: A Philosophical

Analysis of Politics in Pakistan). Khalil holds a PhD in philosophy and has taught

graduate and post-graduate classes in various institutions. He is the only member

from Pakistan of a prestigious society of political philosophers, economists, and

intellectuals, The Mont-Pelerin Society.

Disclaimer: This project is being implemented by Policy Research Institute of Market Economy- PRIME with

support from Center for International Private Enterprise. The views expressed in the report are those of the

authors and may not reflect views of either PRIME or CIPE. PRIME or CIPE, or the authors of this report, do

not take the responsibility of statistical errors as the report uses the publicly available secondary sources.


Tracking Report

Bad Economics is Bad Politics With the parliament’s approval of this year’s budget, the PML-N has entered the fourth year

of its tenure. That means in 2017, it would be presenting its last budget, and in the early

months of 2018, it would be going for the general elections provided the constitutional set-

up runs smoothly.

However, the 2016-17 budget is being dubbed as the Election Year Budget. It’s not just a

simple opinion. That tries to say something very significant. On the face of it, it means that

the said budget prioritizes such popular, and populist, measures that would earn the PML-

N expectedly more and more votes in case it will have to go for snap election.

Analytically, it amounts to saying that the said budget does not envisage any such serious

reforms that would go a long way on the one hand in opening up the economy and thus

giving strength and freedom to the private sector to spur growth, and on the other hand in

curtailing both the physical and non-physical size of the government and thus helping the

same private entrepreneurs to play by the rules of the market.

Each of the both contentions is true. Notwithstanding, there is one exception. On the side of

generating the projected revenue, the said budget is no different from the earlier ones. Very

few have paid any attention to it. That is, in collecting taxes, the government is as partial and

as unjust as it could be. Not only is it depending increasingly on indirect taxes, but is

infamously shifting its whole thrust towards adopting the regime of withholding tax as the

sole mechanism of generating ever-higher revenue. That does not preclude piling up of the

huge domestic as well as external debt.

It should be obvious enough that the taxation policy of a government or its budget is more

important than its spending priorities. That is, revenue comes before the spending; not the

vice versa. That is, it is of paramount importance that how and for whom the taxes are

levied and collected. Whereas this present government is no different from the past ones in

basing its budgeting strategy on a principle according to which volume of taxes is

determined by the spending.

That’s here wherein lie the signs of Bad Economics, which the PML-N government has

chosen to follow. That is: Leave the story of reforms almost totally unfinished, and go for the

rhetoric of popular economic measures. Also, never change the ways of collecting taxes

heavily depending on the extortionist prowess of the tax-collecting authority, i.e. the Federal

Board of Revenue (FBR).

Economic Reforms Forsaken

Be it known that earlier six Reports, here and there, have meticulously analyzed the targets

that the PML-N set in the Economic Manifesto for its May 2013 general elections campaign

to pursue in case it is voted into power; and that what it wanted to achieve is the sort of an

overhaul of the economy in favor of such reforms (i) that would empower the market forces

to play their due role and would also (ii) define the role of the government as a supervisory

and regulatory body ensuring just and fair practices by the market players on the one hand

and on the other securing the rights of consumers as well as producers and traders equally.


Tracking Report

It’s no gainsaying that the echo of the refrain never dies which Nawaz Sharif, head of the

PML-N and the incumbent Prime Minister has oftentimes uttered: ‘It’s no business of a

government to do business!’

However, while in its 4th year, and with political uncertainty in the air, be it just a concocted

hype, and thus very calculated time at its disposal, the PML-N seems to have forsaken its

own economic manifesto with too little of it executed in fact.

Process of Privatization Halted

For example, and also for the purpose of record, it may be noted that one of the immensely

important pillar of the envisaged reforms was (is): PRIVATIZATION. That had already been

got stalled during the last year. In the energy sector, privatization of GENCOs and DISCOs

already stand halted, though the government insists that the process has only been delayed.

Three mammoth tax-payers’ money guzzlers, that is, Pakistan Steel Mills, Pakistan

International Airlines, and Pakistan Railways, they are no more and nowhere on the list of

‘SOEs to be privatized within the assigned timeframe.’

In addition, there are more than 100 SOEs that are still on the privatization waiting list. And,

sure, there is no word about the status of corporations such as the PTV and Radio Pakistan.

That means most of them will remain dependent on the state’s ability to generate enough

revenue for them to consume and survive.

Doesn’t that mean the Pakistani State earns for its own sake?

All that SOEs politics translates into an economics of bigger and bulkier size of the

government that in turn requires as much tax-money to survive!

Energy Sector’s Marketization in Doldrums

Another pillar of the envisaged reforms was (is): LIBERALIZATION and

MARKETIZATION of the energy sector. Here performance of the PML-N government is not

good either; though its score for the Energy Security is better than the score for the Economic

Revival.

In the energy sector, whatever reforms have been introduced during the last three years, the

process has been and is as slow as is not conducive to bring any tangible results in the

remaining time period the PML-N may be believed to have at its disposal due to the coyish

nature of politics in Pakistan.

In this regard the following may be mentioned:

i) Mandatory wheeling of electricity by DISCOs and NTDC;

ii) Net-metering (sale-guarantee) for the small producers/consumers;

iii) Developing alternative renewable energy sources; and,

iv) Developing and creating a wholesale market for electricity.

No doubt, at the level of policy-making, due developments have been made in the above-

listed areas, however, these developments are not being executed; or the process of putting

them into practice is desperately slower. For instance, as far as the net-metering is


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concerned, the NEPRA prepared and approved the regulatory framework last year, but the

DISCOs are yet to make the necessary arrangements in this regard.

Blunt No to Tax Reforms

One of the envisaged reforms that may rightly be interpreted as another pillar of the

economic overhaul is: TAX REFORMS. Rather, it says the last word that determines the

nature of the state and its economic system, as argued above.

That does not underestimate the significance of the regulation which has, like the taxation,

the same power of destroying the private economy, upon which the state builds itself, while

in the hands of a class or a lobby whoever and whichever it is.

Electoral Politics of Development

Another pillar, which the PML-N claims as the hallmark of its politics, is developing the

infrastructure. That is what has been dubbed as the DEVELOPMENT POLITICS of the PML-

N. It seems as if the PML-N has got itself obsessed with the cliché of developing

infrastructure. From another angle, that may be diagnosed as a Complex that the PML-N has

got afflicted with. Here it may be reminded that it is not the PML-N which has this

Complex, it is the Complex which has the PML-N!

Whatever is the case, the PML-N has learned a lesson that it is developing infrastructure that

distinguishes its politics from the politics of other political parties, among which PPP-P self-

styles itself as the one which has a penchant for the new legislation. Ironically and equally, it

also cherishes another penchant for flouting every rule and every law!

Another lesson wherein all the Pakistani politics consummates itself is that what gets you

maximum number of votes. The PML-N considers it has found the touchstone: it’s the

tangible Development that earns it maximum number of votes. So it is devoting both itself

and most of the generated revenue for the development projects most prominent of which

are roads, ring roads, flyovers, underpasses, transport projects (metro bus service; metro

train service). And now CPEC projects may be added to it.

On another note, it may be pointed out that the Development Politics of the PML-N is

purely politically-driven. That is, the local logic and infrastructural context does not justify

rationale of most of the projects, big or small.

That the Norm of this Development Politics is not giving due weight to the economic

considerations, such as economic viability of a project, cost-effectiveness of it, long-term

benefits it may or may not accrue, etc.

Also, another flaw of this type of Politics is that it thrives at the expense of others. That is,

big cities are getting more funds and that leaves small cities and towns with almost nothing

left for them to grow out of the dust of times.

That speaks volumes about the ad-hoc nature of the Development Politics of the PML-N.

Imagine the magnitude of the havoc when the Politics of Development collapses!


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Let it be left to the next general elections which are crucial to determine the truth of this

claim of the PML-N that the Development Politics converts into Electoral Victory! Things are

not what they look apparently!

Present Budget Represents Bad Economics

It is this context that was outlined above in which the present budget may need to be

analyzed, deconstructed and understood; of course, a budget of a government represents

not only its economic philosophy, but its economic priorities also.

In the same context PML-N’s performance over the last three years vis-à-vis the targets it set

in its Economic Manifesto to be achieved while in the government may need to be

compared, evaluated, and judged.

In simple words, it means that through the present budget, the PML-N has opted for Bad

Economics that in the long run may reincarnate in the form of Bad Politics; though it

believes it will help it make temporary electoral gains. Also, that perfectly fits in with its

three-year performance in meeting its targets. Our last six Reports prove that.

Scorecard too reflects the Bad Economics

Here is a resume of its three year performance seen through the seven scorecards:

Table 1: Performance of the Government over Three Years

Report Area:

Economic Revival

Area:

Energy Security

Average

1st Report:

June-December 2013

3.17 4.16 3.66

2nd Report:

January-March 2014

4.47 4.34 4.4

3rd Report:

April-June 2014

4.33 3.93 4.13

4th Report:

July-December 2014

4.6 4.5 4.55

5th Report:

January-June 2015

3.8 4.4 4.15

6th Report:

July-December 2015

4.21 5.01 4.61

7th Report

January-June 2016

4.64 5.27 4.94

Average 4.17 4.51 4.34

So after ruling three years, the overall average score stands at 4.34. No doubt, it sounds quite

negative in the face of the fact that now it’s only about two years within which the PML-N

has to make for what it could not achieve previously.


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Individually considered, in the Area of Economic Revival, it earned an overall average of

4.17; whereas in the Area of Energy Security also, the overall average score of 4.51 doesn’t

fare better either.

No doubt, through the three years, the score though kept on improving, as is evident from

the average score in both Areas; and also, though it is far better from the 1st Report score; as

in the Area of ER, it got a lift from 3.17 to 4.64; that accrues a gain of 46 %. In the Area of ES,

it increased from 4.16 to 5.27; that constitutes a gain of 26 %.

However, in the end, one may ask what is that it all translates into? It all translates into an

average score of 4.17 for ER, and 4.51 for ES. And, the average of both stands at 4.34. It

means so far as the performance is concerned, the PML-N is generally far behind the mid-

way milestone.

That gives a fair picture of the progress that the PML-N has made; i.e. less than 5 score out of

10; however, when viewed against the mirror of its own Economic Manifesto targets, it

appears smaller.

Devil and the Performance’s Details

Let’s delve into some of the devil’s details:

As far as positives are concerned, here is a selective list of components from both Areas

which showed some progress.

Table 2: Components from Economic Revival with Improvement

Economic Revival

7th

Tracking

Report

6th

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Report

Change

(%)

Jan-Jun

2016

Jul-Dec

2015

Score out of 10

1.1 Double the GDP growth rate from 3% to over 6% 5.01 4.91 + 2%

1.2 Budget deficit will be brought down to 4% 3.25 2.95 + 10%

1.3 Inflation will be brought down to single digit in

the range of 7%-8%

4.41 3.93 + 12%

1.4 Other Initiatives for Economic Revival 5.56 5.13 + 8%

1.6 Infrastructure 7.25 5.17 + 40%

1.7 Creating Job Opportunities 6.25 5.38 + 16%

1.8 Tax Reforms 2.71 2.54 + 7%

1.9 State-owned enterprises 4.12 3.88 + 6%


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In the Area of Economic Revival, out of the eight components, only one component got a

gain of 40 %; it is ‘Infrastructure.’ That corroborates the above-argued position declaring the

PML-N as if under an obsession of Development Politics.

As for the rest of the components, only three of them saw an increase of more than 10 %; all

other showed a progress of below 10 %.

Here are the ES components that got improved in the present Report as compared to the last

Report.

Table 3: Components from Energy Security with Improvement

Energy Security

7th

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Report

6th

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Report

Change

(%)

Jan-Jun

2016

Jul-Dec

2015

Score out of 10

2.2 Reforms of National Electric Power Regulatory

Authority (NEPRA) by

4.54 3.75 + 21%

2.5 Permanent elimination of circular debt 4 3.5 + 14%

2.6 Rationalisation of energy tariffs in line with

international prices across all fuels

5

4.5 + 11%

2.7 Reforms of Oil and Gas Regulatory Authority 3.5

3 + 17%

2.9 High priority to import gas through pipelines 6.5 5.5 + 18%

2.15 Decentralizing and creating a wholesale market for

electricity

5.5 5 + 10%

Out of the six components of the ES, only one component improved 21%, and that aims at

‘Reforming NEPRA.’ That means the NEPRA somehow did its job well.

However, as for the rest of the five components, all of them showed an improvement of

more than 10%, ranging from 11% to 18%.

Here are the ES components that declined:

Table 4: Components from Energy Security with Decline

Energy Security 7th

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Report

6th

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Report

Change

(%)

Jan-Jun 2016 Jul-Dec 2015

Score out of 10

2.3 Reforming DISCOs 5.25 5.44 -3%

2.4 Reforming GENCOs 3.25 3.5 -7%


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Both of the components upon which depend production and supply of the electricity has

declined during the last six months. Though the decline appears too little (3 and 7 %), but if

it is read in the context of government’s hesitance in privatizing these entities, politics of the

time, and the fast-culminating tenure of the PML-N, its impact may be far greater for the

reforms in the energy sector.

A Statement of Overall Achievement

Another table explains this phenomenon well. Note that it is based on the gains the PML-N

made in the last three years:

Table 5: Status of the Targets

Status of the Targets Economic

Revival

Energy

Security

Total

Targets Stand Achieved 1 3 4

Positive 28 8 36

Status Maintained 11 12 23

As Yet No Development 6 6 12

Zero 3 1 4

Negative 8 2 10

In short, after full three years, the PML-N’s Cumulative Progress Card has only four targets

as achieved; only one of them is from ER, and rest of the three from ES.

The Indicators that showed progress are 28 for ER, and eight for ES; that makes a total of 36

Indicators that underwent development.

There are 12 Indicators which saw no development at all; both for ER and ES, they are six

each.

Also, there are 23 Indicators, for which the previous status has been maintained; that is,

therein took no development either positive or negative. For ER, they are 11, and for ES, 12.

Four of the Indicators have shown no progress, rather underwent reversal, and thus earned

a score of Zero; for ER it is three, and for ES, one.

A total of 10 Indicators earned negative score; that is, after some progress, they lost a bit of

it, but did not go for a reversal; for ER, they are eight, and for ES, two.

Concluding reflections:

1. In the earlier reports, it was argued that without ensuring the Energy Security, the

Economic Revival will remain a far-fetched dream.

In the light of the present report, though the above proposition may be accepted as

undeniable; however, it may need to be clarified that ensuring Energy Security is a

necessary condition for the Economic Revival, but not a sufficient condition.


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That means even if the PML-N government succeeds in ensuring Energy Security, that is,

the shortage of electricity is minimized, reliable electricity supply is ensured, economical

pricing of electricity is achieved, and liberalization and marketization of electricity (and

energy) starts taking place; that won’t help the envisaged Economic Revival to take off.

That amounts to saying that until and unless certain other fundamental reforms are put in

place, the economy wouldn’t be opening up to grow and expand.

2. First and the foremost reform concerns itself with the Tax Reforms, i.e. the government

needs to change both its thinking and its ways according to which it levies and collects taxes.

In this regards, quoting this case is more than enough. Over the last three years, the volume

of revenue grew 60 %; over the same period, the GDP increased 27 %; whereas for the same

period, taxes recorded a growth of 120 %.

That’s no good omen both for the economy and the PML-N government!

And, that unceremoniously reveals treachery of the economic philosophy and economic

priorities of the PML-N.

3. Also, that points towards the unfruitful marriage of Bad Economics and Bad Politics,

which would not be extending any opportunities for the entrepreneurs, investors, and the

private sector to act on a level playing field; but, sure, it would help the special interests and

lobbies, as is evident from the priorities of the present budget, which in the final analysis

and ultimately would move to favour the entrenched lobbies be they are in agriculture or in

textile.

4. As for the privatization policy of the PML-N government, it is already in doldrums since

the last year. That’s a pertinent example of how Bad Economics gives rise to Bad Politics, or

vice versa. That means there are no chances for the process of privatization to be on track

once again in the next two or one and half years.

Understandably, the privatization of the entities like DISCOs, PIA, Pakistan Steel Mills,

Pakistan Railways, will earn the PML-N wrath of the labor unions, workers, a section of the

general public, and a section of the media also; and all that wrath may cause damage to the

PML-N’s vote-bank. However, that is a fundamentally indispensable step if the government

wants to move in the direction of reforms.

A slim and smart government works far better than a lethargic and bulkier one!

5. Also, as a matter of principle, the physical size of the government is generally inversely

proportional to the size of the private sector. The larger the size of a government, the smaller

the size of the private sector! More than that, that provides a fertile land for the Cronyism

and Rentier classes to flourish. Pakistan is a typical case in point.

6. However, in contradistinction to the privatization, the issue of Tax Reforms is not sort of a

Political Taboo. Instead, it is herein that the blessings of the “Good Economics is Good

Politics” reveal themselves.


Tracking Report

No doubt, fundamental tax reforms, including the dismantling of the FBR, an absolute

failure, which has, time and time again, proved to be more than a while elephant, and a

Stumbling Block in the way of smooth collection of taxes, will be earning the PML-N

government not only the goodwill of businessmen but of ordinary citizens also. That is,

people would be paying taxes but not to an extortionist and selfish taxman.

7. Another area, where the PML-N government needs to have second thoughts is

“developing infrastructure.” It should not mind, since it is bound to give due heed to what

the people and civil society has got to say about its developmental choices and priorities.

That is, it must come out of its shell of blindly believing in the miracles of the Development

Politics. The constitutional mandate does not empower it to do what it likes. Things must be

judged and sorted out on merit and merit alone.

8. Simply, there are two conditions that every project needs to be tested against in order to

see its economic viability: first, whether in the long term it is beneficial or not; and second,

whether it is beneficial for the majority or not. Most probably there are only very few

infrastructural projects of the PML-N that will fulfil both of these conditions.

That’s what convincingly proves that the PML-N, on the whole, has gone for the Bad

Economics that is giving rise to Bad Politics. Also, it exposes the reality of its Development

Politics.

9. In the end, on a positive note, it may be hoped that the PML-N has got the guts to take

heart to have a resolve to make use of whatever time it has left with at its disposal, and go

for the way of “Good Economics is Good Politics.”

It’s time it should leave behind the political mantra that “Bad Economics is Good Politics.”

That means it will have to abandon its lust for the temporary gains, be they political or

otherwise. It’s time that has provided the PML-N with a unique opportunity to prove its

mettle and go for the fundamental reforms that the economy of Pakistan so desperately is in

need of, and it is only thus that it would be able to differentiate itself from the lot of other

political parties, that have been doing a Bad Politics through Bad Economics.

Is the PML-N ready to accept this challenge? Or it is there not to be any different from the

“Bad Economics is Good Politics” lot!


Tracking Report


PML-N Economic Agenda: 7th Tracking Report

1 Manifesto Chapter:

Economic Revival: 4.64 Implementation Status

1 Manifesto Targets Baseline

(July-December 2015)

Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.1 Double the GDP growth rate

from 3% to over 6% - - - - 5.01

1.1.1 Double the GDP Growth rate

4.5%1

World Bank projected

GDP growth rate 4.5%

FY5-16 & 4.8 in FY16-172

4.71%3 - - - 4.25

1 Dawn, Pakistan’s GDP to expand by 4.5pc: ADB, December 4th, 2015. http://www.dawn.com/news/1224026/pakistans-gdp-to-expand-by-45pc-adb

2 Business Recorder, Growth to accelerate to 4.5pc: WB. November 12th, 2015. http://epaper.brecorder.com/m/2015/11/12/1-page/541432-news.html

3 http://www.finance.gov.pk/survey/chapters_16/Overview_of_the_Economy.pdf. Despite a controversy on GDP estimates, this report prefers official

numbers. The score of 4.25 represents an approximate proportionate increase over the baseline.

Overall Score: 4.34

Economic Revival: 4.64


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.1.2 Higher investment in the energy

sector

Rs 55 billion or almost

50% has been released4.

In Jul-Dec 2015, net FDI

in power is $320.2

million5.

Rs 101 billion or

almost 89% has been

released6.

During Jan-May 2016,

net FDI in power was

$168.3 million.7

2.5 2 3.75 8.25

1.1.3

Converting at least 50% of the

remittances by Overseas

Pakistanis into investments

As yet no development - - - Not

Scored

1.1.4

Infrastructure projects

(motorways, dams, housing

projects, new urban centers and

Rs 32.1 billion released8,

which is 19.8% of

allocated amount.

Rs 74.1 billion

released, which is

46.8% of allocated

amount9.

2.5 2 2.25

6.75

4 Planning Commission, PSDP Releases as on 15th January 2016, http://www.pc.gov.pk/wp-content/uploads/2016/01/ReleaseSummary2015-16_15-01-2016.pdf

5 State Bank of Pakistan: http://www.sbp.org.pk/ecodata/Netinflow.pdf

6 Planning Commission, PSDP Releases as on 13th May 2016, http://www.pc.gov.pk/wp-content/uploads/2016/05/ReleaseSummary2014-15_13-05-2016.pdf

7 Net Inflow of Foreign Direct Investment by Economic Groups. http://sbp.org.pk/ecodata/NIFP_Arch/index.asp

8 Planning Commission, PSDP Releases as on 13th May 2016. http://www.pc.gov.pk/wp-content/uploads/2016/01/ReleaseSummary2015-16_15-01-2016.pdf

9 Planning Commission, PSDP Releases as on 13th May 2016, http://www.pc.gov.pk/wp-content/uploads/2016/05/ReleaseSummary2014-15_13-05-2016.pdf .


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

cities) Approved Rs187.95

billion for such

projects10.

1.1.5 Foreign investment in oil, gas

and other minerals

Net FDI in these sectors:

US $157.0 million for

Jul-Dec 201511.


net FDI in these sectors

is US $89.60 million12.

1 0 0.50 1.50

1.1.6 Investment to GDP ratio will

rise to 20%

Investment to GDP ratio

15.12%.13

Investment to GDP

ratio reached to

15.21%.14

- - - 4.3

1.2 Budget deficit will be brought

down to 4% - - - - 3.25

10 Business Recorder, CDWP approves uplift projects worth Rs 218.22 billion, 31st March 2016. http://www.brecorder.com/market-data/stocks-a-

bonds/0/31003/

11 SBP, FDI in Pakistan by Country, http://sbp.org.pk/ecodata/Netinflow.pdf

12 Net Inflow of Foreign Direct Investment by Economic Groups, http://sbp.org.pk/ecodata/NIFP_Arch/index.asp

13 https://www.quandl.com/data/ODA/PAK_NID_NGDP-Pakistan-Total-Investment-of-GDP

14 Economic Survey: “Investment to GDP ratio has reached to 15.21 percent in FY 2016”

http://www.finance.gov.pk/survey/chapters_16/01_Growth_and_Investment.pdf. This shows an increase of only 0.59% therefore score remains unchanged.


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.2.1 Bring down budget deficit to 4% 5.3 %

Expected to be at 4.3%

of GDP during FY

201615.

- - - 5.25

1.2.2 Increase tax to GDP ratio from

9% to 15%

According to the

Finance Minister, tax-to-

GDP ratio went up to

9.45% from 8.4% in the

last couple of years.16

1st half FY 2016: Jul-Nov

Tax collection Rs1048

bn.

2nd Half: Jan-May Rs.

1169 Billion17.

Collection in 2nd half is

11% higher. Tax to

GDP ratio reached to

10.1%.18

- - - 6

1.2.3

One-third reduction in current

expenditures other than salaries,

allowances and pensions

Current Expenditure

(Non Salary): Rs. 3.28

trillion (2015-16).19

Current expenditure

(non-salary) 3.64

trillion grew by 11% in

2016-17 budget.

1.25 0 0 1.25

15 Economic Survey: “For FY2016, the fiscal deficit is expected to be at 4.3 percent of GDP”.

http://www.finance.gov.pk/survey/chapters_16/04_Fiscal_Development.pdf

16 Dawn, Tax-to-GDP ratio rises to 9.45pc: Dar, July 25th 2015. http://www.dawn.com/news/1196174/tax-to-gdp-ratio-rises-to-945pc-dar

17 State Bank of Pakistan: http://sbp.org.pk/ecodata/tax.pdf, and Pkrevenue.com, FBR heading towards achieving Rs3,104bn target; May collection grows by

30pc, May 25th 2016. http://www.pkrevenue.com/exclusive/fbr-heading-towards-achieving-rs3104bn-target-may-collection-grows-by-30pc/

18 Economic Survey 2015-16. http://finance.gov.pk/survey/chapters_16/04_Fiscal_Development.pdf

19 Economic Survey 2015-16. http://finance.gov.pk/survey/chapters_16/04_Fiscal_Development.pdf


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.2.4

Eliminate VIP Culture by

reducing expenses on

Presidency and Prime Minister

Office.

For 2015-16, budgeted

expenditure of PM

House Rs842 million

and Rs801 million for

Presidency20.

For 2016-17, budgeted

expenditure of PM

House is Rs881 million

and Rs863 million for

Presidency21.

0 0 0 0

1.2.5 Reduction in losses on PSEs

For 130 Commercial

Public Sector

Companies for which

public data is now

available (2012-13):

Profit for profit making

PSCs: Rs. 339.86 billion

Loss for loss making

PSCs: Rs. 181.68 billion.

In 2013-14, Profit for

profit making PSCs:

Rs. 367.57 billion

Loss for loss making

PSCs: Rs. 149.93

billion22.

1.75 1.75 0.25 3.75

20 The News: Presidency, PM House, SC and IHC budgets increased, June 5th 2015. http://www.thenews.com.pk/print/12885-presidency-pm-house-sc-and-ihc-

budgets-increased

21 The Express Tribune: Rs863m go to presidency, PM secretariat gets Rs881m, June 4th 2016. http://tribune.com.pk/story/1116011/rs863m-go-presidency-pm-

secretariat-gets-rs881m/. In real terms, there is an increase of about 6% on Presidency and PM Office, instead of a reduction.

22 Ministry of Finance: http://www.finance.gov.pk/publications/State_Owned_Entities_FY_2013_14.pdf. For the first time, Government of Pakistan released

comprehensive statistics on the performance of Public Sector Companies as earlier these reports have reported only selectively available data.


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.3

Inflation will be brought down

to single digit in the range of

7%-8%

- - - - 4.41

1.3.1 Bring down inflation CPI 2.7% YoY change in

Nov 2015.23

CPI 3.2% YoY change

in May 2016.24 - -

Target stands

achieved. -

1.3.2 Limiting government borrowing

Q1 FY16 Govt. Domestic

Debt Rs. 12,714.6 billion;

Total External Debt &

Liabilities Rs 6,945.7

billion.25

Q3 FY2016 Govt.

Domestic Debt Rs.

13,398 billion; Total

External Debt and

Liabilities Rs. 7,286.6

billion.26

1.5 2 1 4.5

1.3.3 Decreasing tax rates

Corporate Tax reduced

to 32%

Maximum customs tariff

25%

FED 16%

Sales Tax 17%

Corporate Tax

decreased from 32% to

31%; Withdrawal of

16% FED on certain

services; customs-

maximum tariff slab

1.5 1.5 1.5 4.5

23 PBS, Monthly Review, November. http://www.pbs.gov.pk/cpi

24 Ibid. The CPI estimates were largely corroborated by an independent study published by PRIME, Pasha, Hafiz A. et’al (2016).

25 Ibid

26 State Bank of Pakistan: http://www.sbp.org.pk/ecodata/Summary.pdf


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

reduced to 20%.

Sales tax remains

unchanged27.

1.3.4 Lower interest rates through

effective monetary policy 6%28 5.75%29 - - -

4.25

1.4 Other Initiatives for Economic

Revival - - - - 5.56

1.4.1 Reducing energy shortage and

cost of producing energy

Nov 15, Electricity

shortfall, 6000 MW30.

Another news item

reports 5,000 MWs.

On 8th June, 2016

Electricity shortfall

closed at 5,000 MWs.31

1.5 2 1.75 5.25

27 Budget Speech 2016-17

28 The News, Policy rate slashed by 50bps to six percent, September 13th 2015. http://www.thenews.com.pk/print/14612-policy-rate-slashed-by-50bps-to-six-

percent

29 State Bank of Pakistan: http://www.sbp.org.pk/ecodata/OVR-Repo-History.pdf

30 The News: Pakistan needs coal-based power projects to meet energy shortfall, November 15th 2015.http://www.thenews.com.pk/print/72616-pakistan-

needs-coal-based-power-projects-to-meet-energy-shortfall

31 Dawn: Power shortfall nears 5,000MW, June 9th 2016. http://www.dawn.com/news/1263672


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.4.2 Opening up markets to

encourage regional trade

Negotiations are going

on with number of

countries and MoUs

signed with Sri Lanka,

Turkey etc. No tangible

policy measures taken.

Govt. evolves a three

pronged strategy of

trade diplomacy in the

multi-lateral, bi-lateral

and regional areas.32

2.5 2 2 6.5

1.4.3 Reforms in financial sector and

capital markets

Pakistan Stock Exchange

established integrating

three stock exchanges.

Status maintained. 2.25 2.75 3 8

1.4.4 Improved regulatory

environment on national level No progress reported.

Some improvements

observed; e.g. CNG

market to be

deregulated, power

distribution

deregulation on the

cards.

0.75 0.75 1 2.5

1.5 Industry and Trade - - - - 3.87

32 Dawn: Govt plans to expand trade diplomacy, March 24th 2016. http://www.dawn.com/news/1247498/govt-plans-to-expand-trade-diplomacy


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.5.1

Making ample credit available

to the private sector

Credit to Private Sector

in Jun-Dec 2015 was Rs

235.5 billion.33


credit to private sector

was Rs 67.3 billion.34

0.5 0.5 0.5 1.5

1.5.2

Industrial Manufacturing

growth will be taken to 7% to

8%

According to PBS, LSM

increased by 2.81% for

Jul-Mar 2014-1535

LSM registered a

growth of 4.7% in Jul-

Mar 2015-16.36

- - - 7

1.5.3 Reforming tariffs to eliminate

anti-export bias - - - -

Not

scored

1.5.4

Establishing an Equity Fund

consisting of private and public

sectors

- - - - Not

scored

1.5.5

Creating Industrial Parks for

large and small industries

especially in the under-

Presumably, already

mentioned projects are

in the process of being

completed.37

Already mentioned

projects are in

progress.38

25 Industrial zones

2.25 1.5 3.5 7.25

33 State Bank of Pakistan. http://www.sbp.org.pk/ecodata/CreditLoans.pdf

34 Ministry of Finance, Budget Speech 2016-17. http://www.finance.gov.pk/budget/budget_speech_english_2016_17.pdf

35 PBS, http://www.pbs.gov.pk/qim

36 Economic Survey of Pakistan 2015-16

37 Express Tribune, Headless National Industrial Parks in disarray, March 15th 2015. http://tribune.com.pk/story/853715/headless-national-industrial-parks-in-

ray/


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

developed areas along CPEC

identified.39

1.5.6

Developing Clusters for

industries (Gems, Jewelry, Fans,

Halal Meat, Sports Goods,

Furniture, Crockery, Utensils)

Pakistan and China

would establish a joint

Investment and

Industrial Cooperation

Working Group for

setting up Industrial

Zones and Special

Economic Zones (SEZs)

under China-Pakistan

Economic Corridor

(CPEC).40

Working group on

economic zones has

not been finalised as

yet.41

1.75 1.5 1 4.25

38 National Industrial Parks Development and Management Company. http://www.nip.com.pk/projects/index.php

39 PRIME Institute (2016) “China Pakistan Economic Corridor: Mapping Business Opportunities”

40 Business Recorder, China-Pakistan Economic Corridor: Body being formed to set up industrial zones, SEZs, October 3rd 2015.

http://www.brecorder.com/general-news/172/1232346/

41 The Express Tribune: CPEC programme: Centre tight-lipped on sites for economic zones, January 12th 2016. http://tribune.com.pk/story/1025902/cpec-

programme-centre-tight-lipped-on-sites-for-economic-zones/


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.5.7 Necessary incentives for MNCs

already operating in Pakistan

Imposition of super tax

at the rate of 3% & 4% in

FY 16 discouraging for

MNCs42

Instead, continuation

of Super tax on MNCs

reporting more than

Rs. 500 million of

income creates

disincentives.

0 0 0 0

1.5.8

Incentives for MNCs expected

to invest in Pakistan in export

oriented manufacturing

Corporate tax for

foreign firms bringing

new FDI reduced to

20%.43

Status maintained.

Above mentioned

Super Tax may act as a

disincentive for

MNCs.

1.25 0.5 1 2.75

1.5.9

Intensifying participation in

regional cooperation forums like

SAARC and ECO, including

FTAs and PTAs

-

Ministry of Commerce

developed a policy to

enhance Pakistan’s

product market

through Multilateral,

unilateral and regional

trade.44

Pakistan has become

full member of

2 1 2 5.5

42 OICCI Business Confidence Index, (November 2015) http://oicci.org/wp-content/uploads/2014/01/OICCI-BCI-survey-Wave-11-Summarised-Highlights.pdf.

43 PRIME Institute (2016), “PML-N Sidetracking Long-term Reforms”

44 Dawn: Govt. plans to expand trade diplomacy, March 24th 2016. http://www.dawn.com/news/1247498/govt-plans-to-expand-trade-diplomacy


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

Shanghai Cooperation

Organisation (SCO)45

1.5.10 All exports will be sales tax free As yet no development.

Government has

decided to introduce

the zero-rated regime

for exports (of five

sectors) from the next

financial year.46

1 0.5 1 2.5

1.5.11 Export-Import Bank will be set

up

According to Finance

Minister, Rs 7b equity

fund to be released on

Jan 4 2016.47

Setting up of the Bank

is in the process. 2 1 3 6

1.5.12 Technology Up-gradation Fund

will be set up As yet no development

Technology

Upgradation Fund is

being established. 48

2 - - 2

45 The News: Pakistan becomes member of SCO, June 25th 2016. https://www.thenews.com.pk/print/130574-Pakistan-becomes-member-of-SCO

46 The Express Tribune: Extending scope: Ministry considering zero-rated facility for 9 sectors, March 1st 2016. http://tribune.com.pk/story/1056704/extending-

scope-ministry-considering-zero-rated-facility-for-9-sectors/

47 Dawn, Exim Bank to be made functional this fiscal year, December 4th 2015. http://www.dawn.com/news/1224027/exim-bank-to-be-made-functional-this-

fiscal-year



Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.6 Infrastructure - - - - 7.25

1.6.1

Bureau of Infrastructure

Development will be established

for private sector participation

Private Power and

Infrastructure Board

already functioning

As yet no

development. - - - -

1.6.2 Construction of National Trade

Corridors

National Trade

Corridors were planned

in 2005, and now several

of CPEC routes overlap

with NTC corridors.

Progress started on:

Karakorum Highway,

Karachi-Lahore-

Motorway, Gwadar-Port

East Bay Express Way &

Gwadar International

Airport

Estimated size of

investment in

infrastructure Rs.

16,524 Billion. 47% of

these projects will be

completed in next 2

years and 20% by June

2019.49

2.5 2 3.5 8

49 Presentation by Chairman NHA at the PM Office, 9th June 2016.


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.6.3

At least 1000 clusters of 500

houses each for lower income

families will be developed

The federal government

is planning to construct

1,000 housing colonies

with 500 low cost

houses across the

country. Pakistan

Housing Authority is

planning to launch the

low cost housing

scheme in Sector I-12

Islamabad with 4,200

apartments to be

launched in next two

months where 50% of

the apartments will be

allotted to BS 1-16

federal employees and

remaining 50% will be

allocated to general

public.50

PHA Foundation has

opened booking of

apartments in its I-12/1

project.51

Balloting of I-16/3

Project, Islamabad is

also completed.52

2.5 1.5 2.5 6.5

50 Business Recorder, Government to build 1,000 Housing Colonies for the poor, December 11th 2015. http://www.brecorder.com/business-and-

economy/189:pakistan/1255041:government-to-build-1000-housing-colonies-for-the-poor

51 PHA Foundation, Ministry of Housing and Works. http://www.pha.gov.pk/NewsDescription.aspx?NewsNO=195


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.7 Creating Job Opportunities - - - - 6.25

1.7.1

Create incentive programmes

for the private sector to create

employment

-

As a matter of policy,

no such programme

exists at the national

level, but selective

incentives have been

provided e.g. grant of

Tax Exemption under

Gwadar Port

Concession

Agreement,53

40-year tax exemption

from sales tax and

federal excise duty for

Gwadar Port

Authority and its

operating companies,

2 1.75 1.75 5.5

52 PHA Foundation, Ministry of Housing and Works. http://www.pha.gov.pk/NewsDescription.aspx?NewsNO=199

53 Business Recorder: Gwadar free zone: grant of tax exemption approved, March 24th 2016. http://www.brecorder.com/top-stories/0:/48477:gwadar-free-zone-

grant-of-tax-exemption-approved/


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

contractors and

subcontractors.54 Other

incentives include tax

credits under various

schemes, reduction in

customs duty on

import of machinery

etc55.

1.7.2 Starting an especially designed

employment programme -

Prime Minister's Youth

Programme projected

at Rs20 billion.56

Interest on Youth

Business Loan

decreased to 6%.57

NBP disburses Rs. 6.5

billion to more than

7,000 youth58.

2 2 3 7

54 The Express Tribune, Pakistan approves massive tax exemptions for Gwadar port operators, March 24th 2016.http://tribune.com.pk/story/1109013/massive-

tax-exemptions-gwadar-port-operators/


56 Budget 2016-17. http://www.finance.gov.pk/budget/Budget_in_Brief_2016_17.pdf

57 Ibid

58 Business Recorder, NBP disburses over Rs6.5bn under PMYBL Scheme, January 26th 2016. http://epaper.brecorder.com/2016/01/26/8-page/727565-news.html


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.8 Tax Reforms - - - - 2.71

1.8.1 Bringing informal economy into

tax net

Voluntary Tax

Compliance Scheme

legislated.

Voluntary Tax

Compliance Scheme

cleared by IMF.59

Only 10,000 traders

have filed income tax

returns against the

target of one million.60

1.5 0 2 3.5

1.8.2 Broadening tax base

980,964 active tax payers

as of January 201661,

registering 18% growth.

Active tax payers

reached to

1,023,150.62

FBR curtailing tax

evasion by keeping an

eye on transactions in

the real estate sector,

purchase of vehicles,

0.5 0.75 1.25 2.5

59 Dawn: IMF clears tax compliance scheme, February 6th 2016. http://www.dawn.com/news/1237662/imf-clears-tax-compliance-scheme

60 Business Recorder: Only 10,000 have filed tax returns under VTCS: FBR, March 25th 2016. http://www.brecorder.com/market-data/stocks-a-bonds/0/28728/

61 Active Tax Payers List, FBR: http://www.fbr.gov.pk/ActiveTaxpayersList.aspx

62 Active Tax Payers List, FBR: http://www.fbr.gov.pk/ActiveTaxpayersList.aspx


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

foreign travels and

bank accounts to

assess the extent of tax

avoidance and tax

evasion.63 The number

of non-filers having

National Tax Number

is four times that of the

number of filers.64

1.8.3 Tax all income As yet no development. As yet no

development. - - -

Not

scored.

1.8.4 No increase in the tax rates

Super tax 4% & 3%,

Sales tax 17%,

Tax on corporate

services with low profit

margin 2%,

Withholding tax rates

for non-filers have

been increased.

Capital Gains Taxes

have been increased.

No change in income

tax slabs for salaried

individuals.

New taxes:

0.5 1 1.5 3

63 Dawn: Tax return filings cross 1m mark, May 25th 2016. http://www.dawn.com/news/1256262/tax-return-filings-cross-1m-mark

64 The Express Tribune: Changes in FBR’s functionality: Govt implements new three-tier hybrid administration, March 5th 2016.

http://tribune.com.pk/story/1059606/changes-in-fbrs-functionality-govt-implements-new-three-tier-hybrid-administration/


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

Capital Gains Tax of

10% if sold in 5 years.

WHT of 5% on mining.

Tax on dividend

income increased

from17.5% to 20%.

WHT on prize bond

15% to 20% for non-

filers, FED on aerated

water 10.5% to 11.5%,

Sales tax on poultry

ingredients 5% to 10%.

1.8.5 Reduce Tax evasion

Anti-Laundering Bill

instead of 26 proposed

tax crimes includes only

tax frauds, forgery and

obstruction in official

tax related work65.

Around 233,000 notices

were issued by the FBR

to potential taxpayers

till Dec 23, 2015, but

FBR sent 450,000

notices to non-filers.69 1.5 0.5 1.5 3.5

65 Express Tribune, Anti-money Laundering: Govt. agrees to whittle down fiscal crimes list, October 3rd 2015. http://tribune.com.pk/story/966452/anti-money-

laundering-govt-agrees-to-whittle-down-fiscal-crimes-list/


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

only 33,000 of them filed

their tax.66

Out of 60,000 registered

companies, 25,551 pay

corporate income tax.

FBR taking other

measures like merging

of NTN with CNIC67

and training also.68

1.8.6 Rationalizing tax rates

In order to rationalize

taxes on property

sale/purchase, which

are done on DC rate,

higher rates of

withholding tax have

been introduced70.

1.5 1 2 4.5

69 Jang, 8th May 2016 (www.jang.com.pk)

66 Dawn, A meagre 33,000 new taxpayers file returns, December 25th 2015. http://www.dawn.com/news/1228559/a-meagre-33000-new-taxpayers-file-returns

67 The News, Frantic FBR efforts to broaden tax base, July 15th 2015. http://www.thenews.com.pk/print/13627-frantic-fbr-efforts-to-broaden-tax-base

68 The News, TRC proposes FBR to train graduates to enhance tax base; July 25th 2015. http://www.thenews.com.pk/print/52757-trc-proposes-fbr-to-train-

graduates-to-enhance-tax-base



Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.8.7

Reform of tax administration

both at the federal and

provincial levels

TRC recommended to

have a single-stage,

single digit non-

adjustable sales tax rate,

and confiscate domestic

assets of people with

offshore tax accounts &

promulgation of Benami

Transactions

Prohibitions Act 2015.71

Information

Technology is used for

simplification of tax

procedures.72 TRC

recommended: merger

of Appellate Tribunal

Inland Revenue and

Customs Tribunal in to

national tax tribunal73 ; Global Positioning

System (GPS)

mapping of shops in

major cities of

Pakistan74, field audit

in case of reduction of

1.75 2 0.5 4.25

71 Express Tribune, Reformation: Oversight committee formed to implement tax reforms, October 11th 2015. http://tribune.com.pk/story/970715/reformation-

oversight-committee-formed-to-implement-tax-reforms/

72 Business Recorder: Taxes: FBR takes new measures to simplify procedures, April 11th 2016. http://www.brecorder.com/taxation/181:pakistan/34744:taxes:-

fbr-takes-new-measures-to-simplify-procedures?date=2016-04-11

73 Business Recorder: TRC for ATIR-CT merger to create 'national tax tribunal', February 14th 2016. http://www.brecorder.com/market-data/stocks-a-

bonds/0/16347/

74 Business Recorder: TRC recommends GPS mapping of shops in big cities. http://epaper.brecorder.com/m/2016/02/23/3-page/562231-news.html


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

tax compliance,

reforming entire tax

system, declaration of

assets outside

Pakistan,

Simplification of

income tax ordinance,

Urdu translation of tax

laws, FBR should be

separated from policy

making, formation of

national tax agency.75

Single officer to carry

out audit function

instead of four76

1.8.8 Ensuring tax compliance by

small businesses

Traders availing

Volunteer Tax

Compliance Scheme

were to be subjected

1.5 0.5 1 3

75 Business Recorder: FBR-TRC recommendations: Dar forms panel for implementation oversight, February 13th 2016. http://www.brecorder.com/top-

stories/single/595/0/15999/

76 The Express Tribune: Changes in FBR’s functionality: Govt implements new three-tier hybrid administration, March 5th 2016.

http://tribune.com.pk/story/1059606/changes-in-fbrs-functionality-govt-implements-new-three-tier-hybrid-administration/


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

lower rate on banking

transactions.77

1.8.9

Publish an Annual Tax Directory

indicating the taxes paid and

assessed in the last 3 years

Tax Directory

published.78

Tax Directory not

published. - - - 0

1.8.10 Reduce the number of federal

and provincial taxes As yet no development

As yet no

development - - -

Not

scored.

1.8.11

Rationalizing sales tax by

ensuring standard rate for all

items

TRC recommended a

flat rate of sales tax on

petroleum products, a

fixed rate of turn over

tax on small retailers,

rationalization of extra

tax regime, withdrawal

of all tax

amnesties/fixed taxes

and value addition

schemes and new

0.5 1 0 1.5

77 Dawn, IMF clears tax compliance scheme, February 6th 2016. http://www.dawn.com/news/1237662

78 The News, Tax details of govt., opposition MPs published, April 11th 2015. http://www.thenews.com.pk/Todays-News-13-36918-Tax-details-of-govt-

opposition-MPs-published


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

incentives for registered

persons.

1.8.12 Broadening the scope of sales

tax

In addition to 17.5%

GST, 5-5.7% tax has

been imposed on

retailers whose

electricity bill is more

than Rs. 1 million.

Sales tax regime

extended to milk and

dairy products.

Simplified scheme for

Retailers Tier-1 for

payment of sales tax at

2% of turn over

introduced79.

1 1.25 0.5 2.75

1.8.13

Ensuring elimination of money

laundering and whitening of

black money

Senate of Pakistan

passed Anti Money

Laundering

Amendment Bill in

October 2015.80

Government shows

resolve to amend

relevant laws and plug

loopholes81.

2.5 1 0 3.5

1.8.14 Improving self-assessment and

audit compliance

In 2015, 75,871 audits

were done; while 1.2 No further progress. 1 0.25 0.50 1.75


80 The News, Senate body passes anti-money laundering bill sans govt. input, October 29th 2015. http://www.thenews.com.pk/print/15430-senate-body-passes-

anti-money-laundering-bill-sans-govt-input

81 The Express Tribune: Pakistan's laws facilitate money laundering, tax evasion, May 22nd 2016. http://tribune.com.pk/story/1107827/pakistani-laws-facilitate-

money-laundering/


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

million income tax

returns were filed82.

1.8.15 Regulatory duty will be levied

on non-essential imports

Regulatory duty on non-

essential imports levied

through ECC.

Status maintained. 0.5 0.5 0.5 1.5

1.9 State-owned enterprises - - - - 4.12

1.9.1 Appointing independent and

professional boards

No progress made and

government intervened

in SOEs governance

several times e.g. in the

cases of LESCO and

NTDC.

Status maintained. - - - 0

1.9.2

Identification and ensuring the

completion of privatisation

process within the assigned

timeframe

Up till August 2015,

evaluation reports of

procurement for

Financial Advisory

Consortium for 16 state

owned enterprises

(including PIA, DISCOs,

Pakistan Steel Mills etc.)

In case of power sector

(DISCOs), government

decides to revisit

privatisation policy

and introduce

outsourcing of

operations84;

Government assures

1.5 1.25 3.25 6

82 Pakistan Today: 75,871 tax returns selected for audit through random ballots, September 15th 2015.

http://www.pakistantoday.com.pk/2015/09/15/business/75871-tax-returns-selected-for-audit-through-random-ballots/


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

were prepared, out of

which only NPCC has

been privatised as yet.83

IMF to privatise PIA,

PSM and State Life in

2016.85

1.9.3

PIA will be transformed into a

profitable and reputed airline of

the region

Pakistan International

Airlines Corporation

(PIAC) converted via

Ordinance from a

statutory corporation

into a company but

revoked by the Senate.86

“Pakistan will privatize

its national carrier by

next July.”87

Parliament adopted

Pakistan International

Airlines Corporation

(Conversion) Bill 2016

which allows

divestment of 49%

share to the private

sector.88

PIA losses also

curtailed.

2 1.5 1.5 5

84 Pakistan Today: DISCOs privatisation plan being re-evaluated, 6th May 2016. http://www.pakistantoday.com.pk/2016/05/06/business/discos-privatisation-

plan-being-re-evaluated/

83 Privatisation Commission, www.privatisation.gov.pk

85 International Monetary Fund: https://www.imf.org/external/np/sec/pr/2016/pr16137.htm

86 Business Recorder, Government Takes Concrete Step Towards PIA Sell-off, December 7th 2015. http://www.brecorder.com/top-

stories/266405:/1253498:government-takes-concrete-step-towards-pia-sell-off/?date=2015-12-07

87 AAJ TV. http://aaj.tv/2015/12/pia-to-be-privatized-by-july-2016-zubair/

88 Dawn: Bill to turn PIA into company adopted, April 12th 2016. http://www.dawn.com/news/1251544/bill-to-turn-pia-into-company-adopted


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1.9.4

Improving the operations of

Pakistan Railways, such as by

setting of autonomous Board

According to Railways

Minister Pakistan

Railways losses at Rs 24

billion by the end of

2015-16 against Rs 27

billion during the last

fiscal year89

Earnings improved

and losses being

reduced.90

1 2 2.5 5.5

1.10 Building the confidence of

private sector - - - - 3.75

1.10.1 Encourage participation of

private sector in planning

No further progress

made. Status maintained. - - - 4

1.10.2

Establishment of Pakistan

Business and Economic Council,

chaired by the Prime Minister

with equal membership of

public private sector, meeting

every quarter

No progress made

regarding Pakistan

Business & Economic

Council

An Economic

Advisory Council

exists that meets under

the Finance Minister

but it comprises of

only experts and does

not have a

representation from

the private sector.

- - - 3.5

89 Business Recorder, End of 2015-16 Railways’ losses to be reduced to Rs24bn: Saad, December 31st 2015. http://epaper.brecorder.com/2015/12/31/12-

page/719406-news.html

90 PILDAT: http://www.pildat.org/publications/publication/QualityofGovernance/PerformanceAnalysisofPakistanRailways.pdf


Tracking Report


Energy Security: 5.27 Implementation Status

Manifesto Targets Baseline


Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

2.1 Creation of a Ministry of Energy

and Natural Resources through

the merger of Ministries of Water

and Power and Petroleum and

Natural Resources.

As yet no development. Status maintained. - - - Not

scored.

2.2

Reforms of National Electric

Power Regulatory Authority

(NEPRA)

- - - - 4.54

2.2.1

Upfront/Feed-in-tariff for wind,

solar, small hydel, and biomass

projects

NEPRA to cut upfront

tariff for new solar

power plants by more

than 27 %; new tariff

would be 11.35 cents to

11.53 cents per kWh for

North region and 10.72

NEPRA withdrawn

tariffs for 3 RLNG

fired power plants of

National Power Parks

Management

Company (Pvt) Ltd.93

Kot Addu Power

2 1.5 2.5 6

Overall Score: 4.34

Energy Security: 5.27


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

to 10.89 per kWh for

South region91

NEPRA has approved a

30-year levelised

upfront tariff of Rs9.345

per unit for a 350MW

coal-fired power plant

to be set up at Port

Qasim by Siddiqsons

Energy Limited (SEL).92

Company (KAPCO)

has secured an upfront

tariff of Rs.

8.1176/kWh94.

NEPRA approved

tariff for low head

hydropower

generation projects: 1)

100% foreign

financing-

Rs11.1016/kilowatt

hour. 2)100% local

financing-

Rs13.0297/kWh.

For high head

hydropower projects:

93 Business Recorder: 3 RLNG-fired power plants: Nepra withdraws upfront tariff, February 11th 2016. http://www.brecorder.com/market-data/stocks-a-

bonds/0/15023/

91 Dawn, Solar tariff cut by 27pc for new plants, December 17th 2015. http://www.dawn.com/news/1226822/solar-tariff-cut-by-27pc-for-new-plants

92 Dawn, NEPRA approves upfront tariff for coal-fired power plant, August 11th 2015. http://www.dawn.com/news/1199723/nepra-approves-upfront-tariff-

for-coal-fired-power-plant

94 The News: Nepra approves tariff for Kapco’s coal power plant, 11th May 2016. http://www.thenews.com.pk/print/118921-Nepra-approves-tariff-for-Kapcos-

coal-power-plant


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

1) 100% foreign

financing-

Rs10.2559/kWh. 2)

based on 100% local

financing, is fixed at

Rs12.0606/kWh.95

Approved upfront

tariff of Rs8.12 per unit

for HUBCO power

plant.96

2.2.2 Mandatory wheeling of electricity

by DISCOs and the NTDC No further progress

NEPRA approved

wheeling of electricity

regulations-GENCOs

can sell their electricity

across Pakistan.97

DISCOs will be

required to maintain

2.5 2.5 0.5 5.5

95 The News: Nepra notifies tariff for hydropower projects, May 12 2016. http://www.thenews.com.pk/print/111903-Nepra-notifies-tariff-for-hydropower-

projects

96 Dawn: Rs8.12 per unit tariff approved for Hubco’s power project, February 17th 2016. http://www.dawn.com/news/1239977/rs812-per-unit-tariff-approved-

for-hubcos-power-project

97 The News: Nepra allows wheeling of electricity regulations, June 10th 2016. http://www.thenews.com.pk/print/126759-Nepra-allows-wheeling-of-

electricity-regulations


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

and improve their

service quality.98

2.2.3 Net metering (sale guarantee) for

small producers/consumers

Under new net metering

regulations, the

consumers can sell extra

electricity to the power

distribution companies

at off peak rates.

Status maintained. 2.5 2 0.5 5

2.2.4 NEPRA determined tariffs to be

notified tariffs

NEPRA has accused

Water and Power

Ministry of not notifying

the determined tariff of

DISCOs for FY2014-15

due to which higher

tariff of the previous

year is being charged.99

Status maintained. 0.5 0 0 0.5

2.2.5 Deregulating and decentralising

by allowing small power As yet no development.

As yet no

development. - - -

Not

scored.

98 The Express Tribune: NEPRA regulations: Producers can sell power to consumers anywhere, June 10th 2016. http://tribune.com.pk/story/1119724/nepra-

regulations-producers-can-sell-power-consumers-anywhere/

99 Business Recorder: Ministry accused of not notifying determined tariff of Discos for fiscal year 2015, September 29th 2015. http://www.brecorder.com/fuel-a-

energy/193:pakistan/1231140:ministry-accused-of-not-notifying-determined-tariff-of-discos-for-fiscal-year-2015?date=2015-09-29


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

producers to sell power directly

to consumers through the

distribution systems of DISCOs

2.3 Reform of Distribution

Companies - - - - 5.25

2.3.1 Corporatization and privatisation

of DISCOs

The federal government

is all set to privatise

Faisalabad Electric

Supply Company Ltd

(FESCO) and the

Expression of Interest

(EoI) for its sell-off is

likely to be received.100

Faisalabad Electric

Supply Company

(FESCO) has sought a

tariff increase of up to

Rs4.91 per unit from the

regulator.101

Privatisation of

FESCO102 and other

DISCOs is delayed but

board of directors of

some DISCOs may be

changed.103

In case of power sector

(DISCOs), government

decides to revisit

privatisation policy

and introduce

outsourcing of

operations.104

1.5 2 1.5 5

100 Business Recorder, EoI for FESCO sell-off to be received tomorrow: Zubair, November 1st 2015. http://www.brecorder.com/general-news/172/1241878/

101 Express Tribune, FESCO seeks hefty tariff rise before privatization, September 22nd 2015. http://tribune.com.pk/story/961067/cost-benefit-fesco-seeks-hefty-

tariff-rise-before-privatisation/


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

Evaluation of bids for

financial advisory for

other DISCOs

completed.

2.3.2

Reduction of transmission and

distribution losses to less than

10%

T&D Losses at 19.1%.

T&D Losses now stand

at 18% (excluding

Karachi Electric).105

1 0.5 1 2.5

2.3.3 Collection of electricity bills to

100%

According to statement

of Minister in Senate

recovery of bills has

improved from 85% to

91%.106

BR reported recovery

reached to 93.1%.107 1.5 2 2.25 5.75

102 Business Recorder: Fesco sell-off delayed till approval of new strategy, February 28th 2016. http://www.brecorder.com/top-stories/0/20675/

103 The News: Govt shelves plan to privatise Discos for now, March 18 2016. http://www.thenews.com.pk/print/106162-Govt-shelves-plan-to-privatise-Discos-

for-now

104 Pakistan Today: DISCOs privatisation plan being re-evaluated, May 6th 2016. http://www.pakistantoday.com.pk/2016/05/06/business/discos-privatisation-

plan-being-re-evaluated/.

105 Presentation by Secretary Water & Power, Briefing Session at PM Office, 9th June 2016.

106 Business Recorder, recovery improves: circular debt stands at Rs 310 billion, December 29th, 2015. http://www.brecorder.com/business-and-

economy/189:pakistan/1259842:recovery-improves-circular-debt-stands-at-rs-310-billion/?date=2015-12-29

107 Business Recorder: Recoveries improve: Power sector collection soars to 93.1pc. http://epaper.brecorder.com/2016/04/07/3-page/747582-news.html


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

2.3.4

Ending of cross subsidy among

DISCOs

Minister for Water and

Power: subsidy on

power tariff has been

cut back by around 50%

in the last three years108

In 2015-16, subsidy

payments have

jumped to Rs196.54

billion from the target

of Rs137.6 billion.109

For 2016-17, Rs95.4

allocated for energy

subsidy.110

Energy subsidy as a %

of GDP: 0.7% 2014-15,

0.5% 2015-16 and 0.4%

target for 2016-17.111

At the same time,

subsidy for Karachi

Electric has been

increased from Rs. 20

to 22 billion112.

- - - 7.75

108 Express Tribune, Power subsidy cut by 50% in three years, October 8th 2015. http://tribune.com.pk/story/969269/power-subsidy-cut-by-50-in-three-years/

109 The Express Tribune: % of GDP: Energy subsidy target goes down further, June 4th 2016. http://tribune.com.pk/story/1116003/gdp-energy-subsidy-target-

goes/

110 Ibid

111 Ibid

112 Dawn: Cost of subsidies cut by 29pc, June 4th 2016. http://www.dawn.com/news/1262621


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

2.3.5 Introduction of pre-paid billing

system As yet no development. Status maintained. - - -

Not

scored.

2.4 Reform of Generating

Companies - - - - 3.25

2.4.1 Corporatisation and Privatisation

of GENCOs under an

independent Board.113

Two transactions are on

track.

PC board has approved

the hiring of a Dubai

Islamic Bank-led

consortium as financial

advisor for strategic sale

of the government’s

remaining 40.3% stakes

in KAPCO.114

Govt. delayed plans to

privatise power

companies.115

2 2 1.5 5.5

113 ‘2 DISCOs, 1 GENCO: PC board accords approval to restructuring, sell-off’, Business Recorder, February 21st 2014. http://www.brecorder.com/market-

data/stocks-a-bonds/0/1155462/

114 Express Tribune, KAPCO privatisation: DIB-led consortium hired as financial adviser, July 28th 2015. http://tribune.com.pk/story/927567/kapco-

privatisation-dib-led-consortium-hired-as-financial-adviser/

115 The News: http://www.thenews.com.pk/print/96047-Pakistan-shelves-plan-to-privatise-power-firms


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

2.4.2 Retrofitting of all equipment As yet no development. Status maintained. - - - Not

scored.

2.4.3

Replacement of furnace oil boilers

by coal fired boilers

The govt. has decided to

put a cap on oil

consumption in

electricity production &

produce about 21,000

MW with the help of

coal, gas, wind and

LNG.

Status maintained. 1 0 0 1

2.5 Permanent elimination of

circular debt - - - - 4

2.5.1 Eliminate circular debt

According to statement

of minister in Senate

circular debt now stands

at Rs 310 billion.116

On April 30th, 2016

circular debt reached

to Rs 318 billion.117

- - - 0

116 Business Recorder, recovery improves: circular debt stands at Rs 310 billion, December 29th 2015. http://www.brecorder.com/business-and-

economy/189:pakistan/1259842:recovery-improves-circular-debt-stands-at-rs-310-billion/?date=2015-12-29

117 Business Recorder: Power sector's circular debt stands at Rs 318 billion, National Assembly told, May 20th 2016.http://www.brecorder.com/top-

stories/0:/47460:power-sectors-circular-debt-stands-at-rs-318-billion-national-assembly-told/?date=2016-05-20


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

2.5.2 Narrowly target subsidies for

consumers up to 100 units

No updated data

available.

NEPRA exempted

lifeline consumers using

50 units per month from

increased tariff118.

Subsidy for lifeline

consumers using up to

50 units continued.

- - - 6.5

2.5.3 Notify electricity tariffs according

to the average system wide cost Target Stands Achieved. Status maintained. - - -

Not

scored.

2.5.4 Power dispatch to be strictly

according to plan, efficiency and

generation cost

As yet no development. Status maintained. - - - Not

scored.

2.5.5 Ensure supply of gas to power

plants

The government has

allowed installation of

power plants on 46 gas

fields.

LNG imports enables

government to supply

round the clock gas.119

1.5 1.5 2.5 5.5

2.6

Rationalisation of energy tariffs

in line with international prices

across all fuels

Fuel prices being

decreased as per

reduction in

Govt. is ready to

deregulate RLNG

Prices and putting

1.5 1.5 2 5

118 Pakistan Today, 21st January 2016. http://www.pakistantoday.com.pk/2016/01/21/city/karachi/nepra-increases-power-tariff-for-k-electric/

119 Business Recorder, CNG, fertilizer, industrial sectors: LNG import enables government to supply round-the-clock gas, April 6th 2016.

http://www.brecorder.com/fuel-a-energy/193:pakistan/32844:cng-fertilizer-industrial-sectors-lng-import-enables-government-to-supply-round-the-clock-

gas/?date=2016-04-06


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

international oil prices. aside the role of

OGRA.120

Govt. is considering

deregulating the prices

of gasoline and

diesel.121

2.7 Reforms of Oil and Gas

Regulatory Authority - - -

3.5

2.7.1 Blanket ban on new CNG stations Target stands achieved. Status maintained. - - - Not

scored.

2.7.2 Priority to public transport in the use

of CNG Target stands achieved. Status maintained. - - -

Not

scored.

120 The News: Govt set to deregulate RLNG prices putting Ogra’s role to rest, February 9th, 2016.http://www.thenews.com.pk/print/97029-Govt-set-to-

deregulate-RLNG-prices-putting-Ogras-role-to-rest

121 The News, 28th January 2016.


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

2.7.3 Tariff rationalisation in gas sector Status maintained.

CNG prices likely to be

deregulated. 122

CNG prices likely to

be deregulated123.

Some reports however,

suggest that govt. is

likely to give

regulatory powers

(demand-supply) to

OGRA.124

1.5 1.5 1 4

2.7.4 Narrowly targeted subsidy for

natural gas and LPG users

Subsidy is available for

households consuming

up till 300 M3 per

month.

Status is maintained. 1 1 1 3

2.8

Aggressive wellhead pricing for

oil and gas exploration

companies

ECC has replaced cost

based formula with a

market based formula

withdrawing annual

state subsidy to Mari

Status maintained. 2 1.5 1 4.5

122 Express Tribune, Mega hydel projects: Govt. studies plan to offer stake to private investors, July 30th 2015. http://tribune.com.pk/story/928837/mega-hydel-

projects-govt-studies-plan-to-offer-stake-to-private-investors/

123 The Express Tribune: ECC to examine legal aspects before deregulation of CNG prices, February 28th 2016.http://tribune.com.pk/story/1055681/cng-prices-

body-to-examine-legal-aspects-before-deregulation/

124 The Express Tribune: OGRA may get powers to regulate oil demand, supply, February 17th 2016. http://tribune.com.pk/story/1048909/petroleum-products-

ogra-may-get-powers-to-regulate-oil-demand-supply/


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

Petroleum.

2.9 High priority to import gas

through pipelines

Turkmenistan,

Afghanistan, Pakistan

and India inaugurated

33 billion cubic metres

TAPI; to be fully

operational by the end

of 2018.125

Gas pipeline from

Turkmenistan to

Gwadar under

consideration126.

Negotiations on Iran-

Pakistan pipeline under

way.

Four TAPI member

countries signed an

initial investment

agreement of $10

billion.127

Rs. 850 billion

investment in

pipelines in

progress.128

2 1.5 3 6.5

125 Business Recorder, Major Energy Breakthrough: TAPI launched, December 14th 2015. http://www.brecorder.com/top-stories/0/1255821/

126 Business Recorder: Turkmenistan to Gwadar: government's decision to lay another gas pipeline welcomed, December 17th 2015.

http://www.brecorder.com/fuel-a-energy/193/1256637/

127 The Express Tribune: Four countries ink deal for $10 billion TAPI gas pipeline project, March 4th 2016. http://tribune.com.pk/story/1058949/tapi-gas-

pipeline-four-countries-ink-deal-for-10-billion-project/

128 Presentation by the Ministry of Petroleum and Natural Resources at the PM Office, 9th June 2016.


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

2.10 Setting up of coal and LNG

import terminals, and coal

transportation facilities

Status maintained.

Rs. 120 billion

investment in 4 LNG

Terminals in

progress.129

2 1.5 3.5 7

2.11

Development of Thar coalfields

and setting up of at least 5,000

MW of new coal fired power

plants under the PPP mode in

Sindh

Govt. gives sovereign

guarantees for $2 billion

for Thar Coal Mine

Power Generation

project130.

Bank syndicate to give

$1.194 billion loan for

Thar Coal131.

Other developments

include $820 million

financing arrangements 132 and Implementation

Agreement with Sindh

Financial close of Thar

Coal Power Project at

Thar Block-II has been

completed. As of 9th

April 2016, funds

worth $1.5bn were

available to start work

on the project.134

Govt. has issued

guarantee of $2 billion

to Engro Powergen

Thar Ltd.

Syndicate of local

2.5 2 4 8.5

129 Ibid.

130 Express Tribune, 11th November, 2015. http://tribune.com.pk/story/988906/thar-coal-mine-and-power-project-government-finally-gives-sovereign-

guarantees/

131 Business Recorder, 22nd December 2015. http://epaper.brecorder.com/m/2015/12/22/1-page/549901-news.html

132 Express Tribune, China, Pakistan ink $820m Thar coal agreement, December 22nd 2015. http://tribune.com.pk/story/1014068/china-pakistan-ink-820m-thar-

coal-agreement/


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

Engro Coal Mining

Company (SECMC) & a

Water Utilisation

Agreement with Engro

Power gen Thar Limited

worth $600m.133

banks will provide

$500 million for

mining and $240

million for power

plant.135 Shareholders

will inject $500

million.136 Two

Chinese bank will

provide $820m

loans.137

2.12

Developing consensus among

the various stakeholders to

facilitate setting up hydropower

As yet no development. - - - Not

scored.

134 Business Recorder: Groundbreaking on 11th: financial close of 660 megawatts Thar coal-fired plant achieved: CM, April 9th 2016.

http://www.brecorder.com/fuel-a-energy/193:pakistan/33784:groundbreaking-on-11th:-financial-close-of-660-megawatts-thar-coal-fired-plant-achieved:-

cm?date=2016-04-09

133 Business Recorder, Thar coal project makes new strides, November 22nd 2015. http://www.brecorder.com/top-stories/0:/1248333:thar-coal-project-makes-

new-strides/?date=2015-11-20

135 Dawn: Thar coal project achieves $2bn financial close after govt guarantee, April 12th http://www.dawn.com/news/1251498/thar-coal-project-achieves-2bn-

financial-close-after-govt-guarantee

136 Ibid

137 Ibid


Tracking Report





Current Status

(January-June 2016)

Legislative and

Policy

Developments

(score out of 2.5)

Institutions &

Institutional

Reforms

(score out of 2.5)

Implementation

(score out of 5)

Total

Score

10

projects by the Federal and

Provincial Governments

2.13 Developing alternative

renewable energy sources, such

as solar, wind, bagasse, biogas,

and biomass projects

Alternate Energy

Development Board

plans to enhance the

energy mix up to 20 to

25% by adding 3,000 to

3,500 MW wind-based

electricity to the national

grid system by 2018.138

In all, nine projects

under progress.

CPEC Wind projects

200 MW; Solar 900

MWs in progress to be

completed in 2017.

2.5 2.5 4 9

2.14

Introducing solar-thermal water

heaters for domestic and

industrial use

No further progress

observed.

Import of solar-

thermal water heaters

has started.

1 0.5 0.5 2

2.15 Decentralizing and creating a

wholesale market for

Draft Electricity Act

2015 proposes

development of private

electricity market.

Deregulation of

electricity generation

& distribution139. 2 2 1.5 5.5

138 The News, Wind projects of 3,500MW to be set up by 2018, November 20th 2015. http://www.thenews.com.pk/print/74175-wind-projects-of-3500mw-to-be-

set-up-by-2018

139 cf. 2.2.2, 2.2.3 and 2.6 above.


Tracking Report

PML-N Economic Agenda: Snapshots from 1st, 2nd, 3rd, 4

th, 5

th, 6

th and 7

th Tracking Reports

1st

Tracking

Report

2nd

Tracking

Report

3rd

Tracking

Report

4th

Tracking

Report

5th

Tracking

Report

6th

Tracking

Report

7th

Tracking

Report

Jul-Dec

2013

Jan-Mar

2014

Apr-Jun

2014

Jul-Dec

2014

Jan-Jun

2015

Jul-Dec

2015

Jan-Jun

2016

Overall Score (Out of 10) 3.66 4.4 4.13 4.55 4.1 4.61 4.94

Economic Revival 3.17 4.47 4.33 4.6 3.8 4.21 4.64

GDP Growth - 5.5 4.60 5 5.04 4.91 5.01

Budget Deficit 0 4.25 4.35 4.45 296 2.95 3.25

Inflation 2 6.75 4.12 5.13 4.92 3.93 4.41

Government Borrowing 0 8.5 8 7 6 4.8 4.5

Reducing Energy Shortage - 6.5 5.5 5.5 6 4.5 5.25

Regional Trade - 6.5 6.5 6.5 6 6 6.5

Reforms in Financial Sector

and Capital Markets

- 6 7 7 7 8 8

Interest Rates 0 0 (Nil) Nil 2 3.75 4 4.25

Industry and Trade 5.75 2.8 3.94 4.7 4.06 4.47 4.025

Infrastructure 6 3.17 4.5 5 5.2 5.2 7.25

Job Opportunities - 4.25 5 5.25 5.13 5.38 6.25

Tax Reforms 5 1.75 3.27 2.9 2.4 2.54 2.71

State Owned Enterprises 4 3.5 4.5 5 3.63 3.88 4.12

Energy Security 4.16 4.34 3.93 4.5 4.4 5.01 5.27

Reforms of NEPRA - 4.5 4.25 3.5 1.63 3.75 4.54

Reform of Distribution

Companies

3.33 2.83 5.83 5.25 5.38 5.44 5.25

Reform of Generating

Companies

1.5 2.5 4 2 3 3.5 3.25

Permanent Elimination of

Circular Debt

5.33 3.25 3.63 3.6 3.5 3.5 4

Wellhead Pricing of Oil and

Gas Exploration Companies

4.5 3.5 3.5 3.5 4.5 4.5 4.5

Gas Imports 4 2 2 2.5 3.5 5.5 6.5

Coal and LNG Import Terminal - 3.5 5 6 7 7 7

Thar Coalfields 5 7 7.5 8 8 8.5 8.5

Alternative Renewable Energy - 7 8.5 8.5 8.75 9 9


Tracking Report

Endorsements

“A constructive effort to critique government policy... this is just the kind of analysis and

debate we need to improve performance of elected government to help serve the people

of Pakistan better.” Asad Umar, MNA and Central Senior Vice President Pakistan Tehreek-

e- Insaf

“PRIME should be appreciated for the report which is the first such effort to hold political

parties to their election campaign promises. The pioneering effort has done a fairly good

job but had the time frame been at least a year rather than six months. The policy

directions need some more time to show their effect.” Mohsin Leghari, Independent

Senator

"If our Governments are truly to serve the public we need to move beyond rhetoric towards

an informed and objective discussion of policy and implementation. This can only happen

if tools are available to objectively assess government performance against stated goals

and objectives. Ali Salman and his team have produced one such tool and deserve much

praise and encouragement for this stellar effort. The results will not make happy reading

for the Government but it is hoped that they will be taken in the right spirit, and efforts

made to address the shortcomings identified in the scorecard." Senator Osman Saifullah

Khan, Pakistan People’s Party Parliamentarian

“The Scorecard, developed by PRIME with assistance from CIPE, is an innovative

mechanism in that it is tied to the platform of a national government itself, in this case the

economic platform of the party elected by a majority to govern Pakistan. As such, it can

be useful for the government itself to measure its progress, show by an independent third

party (PRIME) how progress is going, and serve as a useful mechanism for public-private

dialogue enabling the private sector to both observe progress and advise on priorities for

fulfilling its mandate. This scorecard is therefore unique among other existing indices,

such as the World Economic Forum’s Global Competitiveness Index and the World Bank’s

Doing Business Indicators in that the benchmarks come not from an external third party

but from the government itself, making it all the more relevant.“ Kevin X. Murphy

Chairman, Partners for Sustainable Development, President & CEO, JE Austin Associates

Inc.

“PRIME has successfully initiated an important exercise whereby civil society can track

the economic progress and hold political representatives accountable. Equally important

is to mention that this research is being conducted by an independent think tank of

Pakistan.” Dr. Vaqar Ahmed, Deputy Executive Director, Sustainable Development Policy

Institute

“The concept of evaluating government performance on the basis of its promises made in

its election manifesto is very unique, remarkable and objective. I congratulate PRIME for

formulating tool which can trace direction of the government. Pushing government to fulfill

its promises made in manifesto is the only way that Pakistan can progress leaps and bounds

in a democratic fashion.” Khawaja Muhammad Usman, President, Multan Chamber of

Commerce & Industry


Tracking Report




The current Report reviews Pakistan’s economic performance by

tracking the progress made on the implementation of economic

manifesto announced by the party in power in Islamabad, Pakistan

Muslim League-Nawaz (PML-N). The purpose is to initiate and inform

policy dialogue and public debate on the progress made on the

economic agenda of PML-N. This tracking directly serves the basic

principle of a functioning democracy: accountability.


All PRIME publications are available at our website:

http://www.primeinstitute.org

Dr. Khalil Ahmad

Distinguished Research Fellow

Contact:

Address: Office 401,

Gulistan Khan House,

82-East Fazal-e Haq

Road, Blue Area

Islamabad

Tel: 00 92 (51) 8 31 43 37-8

Fax: 00 92 (51) 8 31 43 39

Email:

[email protected]

URL:

www.primeinstitute.org

PRIME Team

Ali Salman

Executive Director

Zia Banday

Director

Ayesha Bilal

Head Research & Development

Syed Ali

Head Business & Outreach

Talha Hassan

Research Analyst

Jazib Nelson

Research Associate

Raees Abbasi

Manager Operations & Finance

Anum Azhar

Management Associate

Inflation in Pakistan: Understated, Especially for the Poor

The study presents a critical analysis of measurement of inflation, its results

and implications in Pakistan. As a pilot study, it considers price data of

February 2016 as released by Pakistan Bureau of Statistics by taking

consumption items which constitute 80% of monthly expenditure for an

average household. By applying splicing technique of weights rectification

and standardisation, it identifies discrepancies between reported inflation

rates and adjusted inflation rates, in particular for the low income

households. It is authored by Dr. Hafiz A. Pasha et’al.

Towards Flat, Low-rate, Broad and Predictable Taxes

The study analyses the structural and operational weaknesses of the

existing tax system at federal level and suggests alternate solutions in the

areas that require fundamental reforms. It argues that taxpayers have to

deal with multiple tax agencies adding to their cost of doing business and

the non-existence of tax-related benefits is the most neglected area of our

discourse on reforms. It highlights the existing four-tier tax appellate

system, how it has failed to deliver and the alternate system which can be

adopted. This study is authored by Huzaima Bukhari and Dr. Ikramul Haq.

Unilateral Liberaliastion: Pakistan’s Path to Trade Revival

The study focuses on significant shifts in trade policy over the last 25 years and their

impact on Pakistan’s overall trade performance. This study argues that ‘Pakistan

has become relatively open compared to 1990s but when compared to its

neighbouring countries today, it is still much protectionist’. In this regard, this

study discusses the different trade regimes of Pakistan since 1990s till 2014 and

compares Pakistan’s trade performance with that of neighbouring countries. It is

authored by Sara Javed.

7th tracking report. final_july 16 final new

Documents